Controversial changes to Medicare

The prescription drug benefit and other proposed changes to Medicare sparked a national debate in 2003. The bill Congress passed last year could significantly change the health-care landscape, giving managed care even more influence.

Perhaps the most controversial changes are components of the law that introduce incentives for private competition in an attempt to control the costs of the Medicare system.

And, says Russ Newman, PhD, JD, APA's executive director for professional practice, this competition could potentially create a stronger foothold for managed care within the system--a move that would repeat many of the problems created by managed care in the private sector.

Market forces

This isn't the first time Medicare has been subjected toprivate market forces, Newman notes. In 1997, Congress passed the Medicare+Choice program, which gave beneficiaries the choice between a traditional Medicare plan and private managed health plans. The program wasn't a big hit. Most beneficiaries chose to stay with traditional plans. Those who didn't ended up with no plans at all when private insurers pulled out because of insufficient profits, he says.

The current law attempts to rehabilitate the Medicare+Choice approach through improved reimbursement and subsidies, beginning in 2006.

"This is an effort to sweeten the pot for health plans in hopes they will get back involved through the existing Medicare program," Newman explains.

In addition, the new legislation contains plans for a six-year demonstration project that would begin in 2010 in six metropolitan areas where private plans have at least a 25-percent market share of Medicare dollars.

The bill's opponents, including Sen. Ted Kennedy (D-Mass.), are concerned that private competition will potentially undermine the Medicare program by forcing the sickest patients into traditional plans while younger and healthier beneficiaries end up in private plans, therefore increasing Medicare premiums.

"We're concerned about these efforts to increase private competition in the publicly funded Medicare program," says Newman. "I've yet to see a successful instance of using market forces to solve cost problems in health care. It's been tried for the last 10 years. Not only has it not contained costs, it has created quality and access problems."

Psychology's interests

Those problems have affected both health-care consumers and providers like psychologists. And it appears the new legislation may only worsen those problems, despite its appearance of doing good. The bill, says Bryant Welch, PhD, JD, former APA executive director for professional practice and Div. 39 (Psychoanalysis) representative to the APA Council of Representatives, who now represents psychologists and patients in litigation with managed-care companies, is a classic Trojan horse.

"Elderly are being lured into this with something they need--prescription drug benefits," he explains, but in his view the bill is "really just a re-enactment of the whole managed-care debacle we've been living with for the past 20 years."

Indeed, Welch says the plan isn't unlike the early techniques used to give managed care its foothold.

"As we know from the past, when you have a system that permits cherry-picking, the cost outcomes are going to make it look like managed care is a more cost-effective way of providing health care," says Welch. "Then we'll move to a system where everyone is in the competitive market.

"Once that takes hold, it will be harder to reverse it," he says. "I think it's potentially the most anti-health measure we have ever passed in this country."

There will surely be continuing debates on the issue, says Newman: "All of that will be influenced by who is in the White House in the next term and who stays in control of Congress," he explains. But it will also be influenced by grassroots action and communication with members of Congress. "There's time to change the outcome of this legislation," says Welch. "But we need to jump on it right away."

And, Newman emphasizes, "We have much work ahead of us to ensure the preservation of Medicare as an effective entitlement program for all older Americans."